Private Cloud Can Beat Public Cloud on Price: Report

Two out of five IT decision makers say their private clouds are operating at lower unit costs than public cloud, according to survey results released Thursday by VMware and 451 Research.

451 Research surveyed 150 IT decision makers on behalf of VMware in February 2017 for Can private cloud be cheaper than public cloud? According to the results, data protection is cited as a reason for private cloud use by 71 percent of users. Cost-efficiency motivates private cloud use for 54 percent, asset ownership does so for 43 percent, and integration with business processes motivates 42 percent.

Almost a quarter (24 percent) say they pay less than a 10 percent premium for operating a private cloud environment, in addition to the 41 percent finding private cloud cost lower than public cloud. More than half said cost-efficiency drives private cloud use. Respondents also said they would migrate only 50 percent of their workloads to public cloud if its cost were half that of private cloud.

The factor considered most important in achieving cost savings with private cloud is capacity-planning tools (18 percent), followed closely by favorable software license terms and automation tools (17 percent each), and cost/budgetary management tools (15 percent). Another factor in price savings for public clouds is the ability of some companies to negotiate favorable terms with software or hardware vendors or data center providers, or to reuse existing licenses.

Using a “basket-of-goods” methodology, the Cloud Price Index shows a decrease of just 4 percent in cloud price between October 2015 and March 2017, according to the report.

“Cuts are typically levied on just a single service, usually virtual machines, while other costs such as bandwidth, storage and management stay the same,” write the report authors. “But an end user doesn’t consume virtual machines in isolation; an app consists of far more than just compute, and in public cloud, these items are charged separately. On a private cloud, storage, network and compute are intrinsically aggregated as part of the same platform, and the same investment.”

Data security and performance are the two top concerns with public cloud among respondents, with 39 percent expressing concern with managing costs.